Port Washington residents should prepare for a water rate increase this year.

The Common Council on Tuesday agreed to seek an average 5.6% water rate increase from the Wisconsin Public Service Commission.

While that may sound like a lot, Christy Cramer of Trilogy Consulting told aldermen that it is a modest increase, noting that if averaged, it represents less than a 1% annual increase over the six years since the last rate hike was approved.

The average residential customer will see an increase of between 3% and 4%, or $2 to $3 per bimonthly bill, she said, adding large residential users and industrial customers will see larger increases.

“This is the type of reallocation needed to make sure the right people are paying the right price,” Ald. Doug Biggs, a member of the city’s Finance and License Committee, said. “I think it’s important to make sure we’re charging appropriately.”

Cramer noted that the city hasn’t had a water rate increase since 2010, when the price went up 3%.

Although the utility has been generating enough money to cover its operations and maintenance expenses, debt service and capital outlay, Cramer said, major expenditures are coming up in the next few years.

These include installation of ultraviolet treatment equipment, water main replacement projects and other capital and rehabilitation projects, she said.

In addition, she said, the operational and maintenance expenses have increased, resulting in less income to finance operations.

“The utility’s in very sound financial shape. The utility has more than the minimum recommended reserves by a little bit,” Cramer said. “We’re really looking at maintaining the utility’s financial state.”

The rate increase is expected to generate an additional $157,000 annually, Cramer said.

The city’s application to increase its water rates will go to the PSC, which will thoroughly study it, Cramer said. After the review, she will update the application and the PSC will hold a public hearing before taking action on the request.

This may be the city’s first rate increase in six years, but others are sure to follow. Cramer told aldermen that over the next five years, she expects the city will seek a couple rate increases of as much as 3%.